In this proposal, we seek to understand the role of exogenously derived CD45+ hematopoeitic cells in the development of the lung's innate immune system, and in the maturation of the pulmonary vasculature. Notably, our data show that the embryonic lung contains 2 anatomically distinct sets of CD45+ cells. One CD45+ population localized to the mesenchyme, contains cells of early and late macrophage/myeloid lineage. This finding along with data showing that mature macrophages emerge in isolated embryonic lung cultures exposed to LPS, suggest that the embryonic lung itself is a site of myeloid differentiation. The other CD45+ population is most apparent in late fetal life (E18), aggregated around branches of the pulmonary artery. Many of these cells co-express smooth muscle actin, are flattened, and appear to be in various stages of incorporation into the vessel wall;further work suggests that notch-3 dependent signaling controls their fate. Herein, we propose the following central hypothesis: one fetal CD45+ population locally differentiates in response to mesenchyme-derived signals to help establish the lung's innate immune system, whereas the second peri-vascular CD45+ population directly contributes to maturation of the pulmonary artery wall. In Aim 1, we will focus on the CD45+ mesenchymal site. Our studies will clarify the ontogeny of myeloid cell maturation and identify lung parenchymal cells that produce signals stimulating macrophage and dendritic cell differentiation. Using lung embryonic cultures, we will then define the precise regions of macrophage and dendritic cell differentiation, and evaluate the role of the lung epithelium in these events. In Aim 2 we will focus on the peri-vascular CD45+ cells. We will further define their phenotype, evaluate their distribution in other embryonic tissues, and determine the importance of PU1 dependent myeloid cell differentiation for their development. In the final set of studies, we will focus on the role of notch-3 in cell fate determination and identify the functionally relevant ligand-notch-3 binding interaction that is operative in this cell population. Through this work, we will clarify how interactions between the developing lung and the hematopoeitic system ensure that the newly born lung is ready for air-breathing. PROJECT NARRATIVE: Currently, there is little or no information regarding how cells derived from the fetal circulation contribute to lung development. Our studies suggest that such cells are not only involved in establishment of the lung's immune system, but are also involved in development of the lung's blood vessels. This work will, thus, fill in major gaps in knowledge and should foster a new developmental paradigm for understanding how the embryonic lung becomes equipped air breathing. Elucidating these developmental processes is critical for advancing the treatment of congenital lung diseases, and the specific lung diseases that afflict premature infants.